Posted by D. Cupples | Yesterday, Congress passed a $152 billion economic stimulus package that President Bush seems interested in signing (see bill text). The bill includes tax breaks for businesses that buy equipment, provisions allowing federally-backed consolidators (e.g., FHA and Fannie Mae) to insure larger home mortgages, and rebates for us ordinary taxpayers.
If all goes well, we can expect rebates in or before May, in the following amounts:
Individuals (up to$75,000 Adjusted Gross Income) $600
Couples (up to $150,000 AGI) $1,200
Parents (per child under 17) $300
What about people whose AGI was greater than $75,000 or $150,000 (for singles and couples, respectively)?
Higher earners' rebates would decline by 5% of the amount over $75K or $150K that they earned -- with $0 being the stopping point (i.e., no negative rebates).
An uncharacteristically bipartisan effort, the House passed the stimulus package by 380-34 votes, and the Senate passed it by 81-16 (see House and Senate roll call votes). The Washington Post reports:
"Senate Democrats had sought a considerably larger package that included an extension of unemployment insurance, billions of dollars in energy tax credits and federally backed bonds for home construction. It also would have ensured that low-income seniors, veterans and workers who earned too little to pay income tax would have received the same amount, $500, as working individuals. It would have doubled eligibility thresholds, to $150,000 for individuals and $300,000 for couples.
"But when a GOP filibuster of that plan survived by a single vote, House Democratic leaders publicly pressured their Senate counterparts to scale back their ambitions and move fast."
Most people agree that the stimulus package is a quick but partial fix. Economist Paul Krugman (via Memeorandum) commented:
"Since September, the Federal Reserve has slashed its target interest rate five times, and everyone expects it to cut further. But interest rates were cut dramatically during the last two slumps, too — yet the slumps went on for years anyway.
"Meanwhile, Congress and the Bush administration have reached agreement on a much-hyped stimulus package. But the package, while probably better than nothing, is unlikely to make a noticeable dent in the problem — in part because the insistence of the administration and Senate Republicans on blocking precisely the measures, such as expanded unemployment insurance and food stamps, that are most likely to be effective.
"Still, by January the White House will have a new occupant. If the slump is still going on, which is likely, this will offer a chance to consider other, more effective measures.
"In particular, now would be a good time to think about the possibility of going beyond tax cuts and rebate checks, and stimulating the economy with some much-needed public investment — say, in repairing the country’s crumbling infrastructure."
Other BN-Politics Posts
* FBI Investigating Mortgage Fraud
* Shaken, not Stirred: Thoughts on market Volatility
Thanks for the appreciative comment on my Thursday Thirteen post! :)
Posted by: maryt/theteach | February 08, 2008 at 02:09 PM